Novomatic Named In Casinos Austria Corruption Scandal

Casinos Austria is at the centre of a growing corruption scandal that extends to the top of the political powers of the country. Austria’s parliament opened hearings on Tuesday to set up a committee to investigate corruption allegations in what is known as the Casino Affair.

The scandal focuses on claims that government officials have partnered with Novomatic Group’s gambling company to open Austria’s online gambling market in exchange for political insiders obtaining lucrative executive positions.

Novomatic has a 17% stake in Casinos Austria, while the government owns 33% and the Sazka Group of the Czech Republic holds the largest share of 38%. The Win2Day brand of Casinos Austria is currently the only operator approved by Austrian punters to take online bets.

The controversy started this spring when Casinos Austria appointed its new chief financial officer Peter Sidlo, a key ally of the Austrian Freedom Party (FPÖ) leader and former vice-chancellor of Austria, Heinz-Christian Strache. With the agreement of both the government representatives on the board of Casinos Austria and the directors of Novomatic, Sidlo was appointed his position.

The hiring of Sidlo attracted strong criticism, considering that for such a high position he had no apparent credentials. His election to the board of Casinos Austria, together with another politicised person, also forced Casinos Austria to fire other board members whose terms were not over until 2020, forcing the company to shell out € 7.5 million in severance payments.

The allegations are that Novomatic’s support for the appointment of Sidlo would be rewarded with the government opening up the Austrian online gambling market to other operators, including Novomatic, which operates online through the StarVegas brand of its Malta-licensed Beatya Online Entertainment subsidiary.

It was also said that Novomatic is looking for the restoration of its land-based slot licences that the municipal authorities of Vienna revoked in 2015. Novomatic teamed up with the Vienna Chamber of Commerce in May to push for the right to restart its capital operations.

Sazka boss Robert Chvatal told local media that his company “felt a great deal of pressure to vote for a person who clearly and undoubtedly has inadequate work experience for a CFO position in such a big gambling company. Now we know why…”

In May, the German media outlet Der Spiegel published secretly taped sting videos in July 2017 in which Strache of the FPÖ discussed how to arrange an alleged Russian billionaire’s illegal campaign contributions. The name of Novomatic was mentioned as a contributor to the FPÖ in the video, but Strache acknowledged that the company is contributing to all Austrian parties.

Senior FPÖ and Novomatic officials’ homes were raided by Austrian authorities in August, seizing phones and files. Sidlo then took a leave from Casinos Austria. All involved politicians as well as owner Johann Graff of Novomatic and CEO Harald Neumann vehemently denied any wrongdoing.

Other gaming operators are not going to let them pass through a good crisis. The Austrian Betting and Gambling Association (ÖVWG), whose members include online stalwarts such as Kindred Group, Mr Green and Bet-at-home, issued a statement saying the scandal proved that “Austria urgently needs to rethink its gambling monopoly.”